October 2, 2014
West Africa produces 70% of the global supply of cocoa and Ivory Coast and Ghana alone produce 60% of world supply. So far the Ebola outbreak has not spread to these two countries though it has caused the closing of the borders inhibiting the travel of foreign seasonal workers. The Centers for Disease Control (CDC) warns that given the current trends, 1.4 million Ebola cases could occur in West Africa. If it crosses over into Ghana or Ivory Coast and a prolonged disruption of the cocoa industry occurs, cocoa prices could increase by over 100%. This increase will translate into a far lower increase in price for products that contain cocoa as an ingredient, but companies that use cocoa in their products will find it difficult to pass on the entire cost increase to their customers. Companies such as Hershey, Mondelez which owns Chips Ahoy and other brands that use cocoa, and Kraft Foods which owns Tobleron and Milka could be significantly affected.
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